Momentum Podcast: 523
Simplicity Scales and Complexity Creates Constraint
by Alex Charfen
Cadey and I just got back from California. We were at Taki Moore's event surrounded by over 100 coaches from around the world. It was incredible. I wanted to record this podcast to share with you my takeaways and the biggest insight I received about growing and scaling a business under $10 million.
Full Audio Transcript
I am really excited to be recording this podcast from my house. I just got back from California, where we spent some time at Taki Moore's event, with over a hundred coaches from around the world, and I want to share with you the biggest insights that I got, or the biggest insight I got, about growing and scaling a business under $10 million. So, if you're under $10 million, and you're not growing, I want to help you right now, before I fly out to Canada for Archangel, which I will be sharing with you on the podcast soon. So, if you want to know my biggest insight from Taki's event, it's coming up soon.
I'm Alex Charfen, and this is The Momentum Podcast, made for empire-builders, game-changers, trailblazers, shot-takers, record-breakers, world-makers, and creators of all kinds. Those among us who can't turn it off, and don't know why anyone would want to. We challenge complacency, destroy apathy, and we are obsessed with creating momentum, so we can roll over bureaucracy and make our greatest contribution. Sure, we pay attention to their rules, but only so that we can bend them, break them, then rewrite them around our own will. We don't accept our destiny, we define it. We don't understand defeat because you only lose if you stop, and we don't know how. While the rest of the world strives for average and clings desperately to the status quo, we are the minority. The few who are willing to hallucinate, there could be a better future. And instead of just daydreaming of what could be, we endure the vulnerability and exposure it takes to make it real. We are the evolutionary hunters. Clearly, the most important people in the world, because entrepreneurs are the only source of consistent, positive, human evolution. And we always will be.
I had a ton of fun at Taki's event. Taki Moore has become a really close friend of mine, he's one of my closest friends out there, and he is one of the most brilliant business people I've ever met in my life. When it comes to coaching, and coaching frameworks, and simplification, and scaling a coaching business to where it's not just you working one-on-one, there's no one out there who has the understanding and the knowledge and the ease of sharing the information that Taki does. He's just amazing, I've had so much fun with him. And, he's helped us grow our coaching program like crazy.
When I was out at his event, we were with about 100, 120 coaches from around the world, and I talked to a ton of them. And I saw this business principle illustrated over and over again. Simplicity scales naturally. Complexity creates constraint. You've heard me say stuff like this over and over again, like growth creates deficit, or growth creates... Now I can't remember it. But the point is that as you grow, as you develop your business, it's going to get more complicated, it's going to get more difficult. The more simple your business is, the easier it will scale.
And here's what I saw at Taki Moore's event. The simplest businesses were the ones that were growing the fastest. The guys at CEO Warrior who work with service businesses, and have basically one deliverable that they sell them, they are crushing it. Clint Salter, who owns the Dance Studio Owners Association, he only works with dance studios, he has a deliverable for them, it's a ongoing coaching and mastermind, it's very simple, and he's crushing it. Now, I talked to a lot of people at the event, too, that were, you know, I'd ask them, "What do you do?" "Well, I have a product, and I have a coaching group, and I do some one-on-one, and I'm an agency." And I heard that over and over again.
And here's what you see when you go to events, if you go to enough of them, the simplest business plans are the biggest ones there. The people who have business plans that they can explain easily are the ones that scale naturally. The business plans that have one promotion, one product, one sales process, and one, one, one, make it easier, are the ones that grow, always grow.
And it's like, this is so clear, however, business people, entrepreneurs, without experience, feel like they need to do a bunch of different stuff to be successful. And the pain involved in the process of doing too much is overwhelming, because you're overwhelming yourself doing too much, you've got way too many deliverables, you're not going to scale the business, because it can't scale, there's too many things going on, and if you don't have the right perspective about this, this will hold you back more than anything else. More than anything you're doing. In fact, if you're not making money, here's the issue that so many people who have a business like this have. And I want to share from a very personal place.
Let me get real with you for a second. In 2014, 2015, 2016, Cadey and I had to make a major pivot. We had been in real estate, and I didn't want to be in real estate anymore, I didn't want to deal exclusively with real estate agents. I wanted to show people how to grow massive multi-million-dollar businesses, 10s of million-dollar businesses, 100s of millions-dollar businesses, that's what I've always done. And in real estate, with the average agent, really good business is a six-figure business, and we had to pivot.
And so, as part of that pivot, I started doing all kinds of stuff. I started speaking, consulting one-on-one, coaching one-on-one, signing agreements with people where I would work with them for a period of time. We had products we were selling, we had events we were trying to do, and our business looked like an Afghan bazaar. There was so many different things, we had to have a sales process for each one. It was so confusing. If somebody called in and wanted me to speak, they went through one process, if somebody called in and wanted to buy something, they went through another process. If somebody called in and had an event they wanted to do with me, we went through another process. There were so many different things we were doing, it was overwhelming. And as a result, I was doing different stuff all the time, we were making money, but our business was not growing, and honestly, I wouldn't want to grow it.
When I think back to those days, it was so difficult and so overwhelming, because the deliverables were all different, there was no consistency, it was difficult for me to get help, because I was doing something custom almost all the time, and I always had this anxiety that I wasn't going to deliver. I mean, for somebody who's been in business as long as I have, and has the proven results that I have, I was still feeling anxiety I wasn't going to deliver. Because when you're doing all of these different things, that's how it feels. If you're not feeling anxiety, there's probably something wrong. And here's why you should simplify as fast as you can, because here's what happened to Cadey and I in that timeframe.
When we finally made a massive change, it was in July of 2017. I had two business mentors tell me to do the same thing at the same time. Russell Brunson and Taki both said, "Dude, you have to simplify, pick a horse, find one product, go out there, and make it work." And we did. We created a coaching product, the coaching product went to well over $1 million a year in under a year, and we have continued iterations of that coaching product till today, where we are well over a $3 million a year run rate, in just two years. We're in our 25th month of business right now, August 2019 will be our 26th month. We are crushing it right now, but it's because we created this simplicity.
And so here's what happens, if you have a complicated business right now, here's the thought process. It's so hard to cut anything. I want to help you move to this thought process, cut as hard as you can, as fast as you can, and simplify as fast as possible.
I look back at that time, 2014, '15, '16, it was brutal. There was a ton of work and a ton of effort and very few results. Nothing repeated over and over again, because we didn't focus on one thing long enough for it to do that. I was pulled in so many different directions, I had anxiety, I was exhausted, there was too much going on. I wasn't even having fun.
But when we finally cut everything out, and it was hard. Here's how hard it was. In July of 2017, Russel and Taki both said the same thing, so I said, "Okay, we're not going to do any of these things anymore." We shut down products, we shut down events, I stopped speaking, I stopped doing any kind of consulting. And about a week after we made that decision, I got a call for a $150,000 consulting agreement. As I say this now, I'm like, I get body reactions, because I can remember getting the call, it was a group that we wanted to work with, it was a group we'd been trying to work with, and two months earlier, or heck, two weeks earlier, I would've been thrilled to have gotten that call, and now that we had made this decision, here was this opportunity I had wanted, and I actually said no.
It was one of the hardest things I've done, I said no. Cadey and I talked about it, I said, "If we're going to really do this, if we're going to focus, if we're going to stop being the Afghan bazaar, if we're going to stop doing everything that people want us to do, and start doing what we want to do, and build a company that we're excited about, it starts here." And I turned down a $150,000 deal, that would've been game-changing for us, it would've been a huge celebration, just a couple weeks before. And why? Because I wanted to simplify and I knew that it wouldn't work if I did, and had I taken that $150,000 contract, we probably wouldn't be over $3 million, headed to $10 million right now, with an incredible team surrounding me.
So, here's why this is so important. Success creates deficits, and growth creates complexity. I nailed it that time. The more successful you are in a business, the more you're going to have to fill in the cracks and the fissures in the business. When you're successful at lead generation, you're going to need more sales power. When you have more sales power, you're going to need more delivery. When you deliver a whole bunch, you're going to need more customer service. There's all kinds of deficits created by successfully selling more in a business. And the more you grow, complexity comes along with it. You don't have to invite it, complexity's there anyway. Just the act of growing creates complexity. Because, as you bring in people, as you bring in systems, as you bring in products, your business... Not as you bring in products, keep that at one until $10 million. But as you grow, your business will become more complex.
I remember in our last business, when Cadey and I crossed about the $7 or $8 million threshold, we started having problems with our bank. Our bank was set up to handle small businesses under about $5 million, and they were set up to handle big businesses over several hundred million, but once you got in like the big multiple millions and had some issues and needed some personal service, there was nothing there. We actually had to change banks because of so many different times we went to the bank to figure out how we should do something and they didn't have an answer for us.
So, success will create deficits everywhere, make your business simple so that you can battle it. Also, you as a CEO are going to be going through constant behavioral change and transition as your business grows. No two days will be the same in a fast-growth company. So, you should simplify the world around you as much as you can. Simplify the products, simplify the delivery system, make it easier on you. Start actually asking the question, how do I make this entire business easier on me? How do I make this entire business easier on my team? The easier it is, the easier you will scale.
And, because you're going through constant transition, you will have the time to accept that transition, to understand that transition, to move forward. And this is a big one. Pressure and noise naturally go up, and it is impossible to stop it. If you're going to grow and scale a business, I don't care what systems you put in place, who you have working with you, who is on your team. You are going to experience the pressure and noise of growing a business, that's just how it is. There's no way to avoid it. It's like the law of gravity, there will be pressure and noise. So, the more you simplify, the more you create space for the natural complexity, the natural deficits, and the natural noise that growth on its own creates.
So, here's what you need to know. Simplicity scales and complexity creates constraint. If you can get your client an outcome, and make your business simpler, you are winning. If you can get your client to what they want and what their expectations are from you, and you can make your business easier, you are winning. So, instead of asking yourself, what's everything we have to do? Ask yourself, how do we make this easier? How do we make this simpler? How do we make this so that it's easier for us, easier for our clients, easier for our team, creates more momentum?
The second thing you need to know is you really should have one clear avatar until after $10 million. And everybody freaks out when I say this. But you should have one clear avatar until $10 million. One clear avatar that you're affecting. When you start chasing more than one group of people under $10 million, you pull the rug out of the momentum of your business.
Here's why. When you are in the business of helping, like we are, business owners grow and scale, that already have a business going, who have an opportunity that's huge. Here's what happens. The business owners in our group go to their masterminds, they go to events, they go talk to people, they hang out with other people. And somebody says, "Hey, I'm having trouble growing my business," they hear about us because we have a very tight avatar. It's the same person we're helping all the time. If we were trying to help people get started, and people who are just growing their team, and people who are just planning, and people who are in the growth rate that we're already talking to, it would be a lot more watered down and diluted especially at $3 million like we are right now. We are going to help this avatar all the way to $10 million, and go beyond.
And the way you get there, is by attracting more of the avatar, and then using retention, one, making sure they don't return your product, resale, two, making sure they buy from you again, and upsell, three, make sure they buy something else from you as your business grows. Focus on one avatar, and life will get so much easier. When you switch to more than one avatar, everything in sales and marketing doubles in complexity. Don't let anybody tell you different. It doubles in complexity.
And third, as you grow, more people have to remember everything. Just think about that, if you grow your business, your team needs to remember the product line, the deliverables, who you call on, as the team expands, more and more, a larger population needs to remember all of that.
Here's what's interesting. You look at a company like Dell, and it's a valuable company, but Dell has 10s of thousands of SKUs, they have so many variations it's hard to understand, their products are completely uninspiring, it's like walking into a warehouse and picking up a widget, that's what you do at Dell. But then you look at the most valuable company in the world, which is a direct competitor of Dell, Apple Computer, and you ask the average 13-year-old, and they can explain Apple's entire product lineup to you. A lot of them can. Like, not just a few, but the entire product lineup. In fact, they can go through the iPhones and tell you what they are, they can go through the Notebooks and tell you what they are, they can go through the iMacs, the Mac Pro. You go into an average office building, walk up to an average conference table, you can put Apple's entire product line there. That is simplicity for scale. That is an argument for simplicity. It's the most valuable company in the world, and you can put their entire product line on a conference table.
So, think about that, when it comes to your business, are you creating simplicity that scales naturally? Or are you climbing uphill because you've made it hard?
So, the results that you get from doing this, are... You can't argue against them. Here's the results we got. 2013, sorry '14, '15, '16, Cadey and I brought in over seven figures, but it was haphazard, and it was precarious, and it was challenging, and it was frustrating, and there was a lot of months where we didn't make money, and we had to make it up in other months. 2016, July, we stopped all of that, we started the products we have now, we created massive simplicity, we pointed everything at one coaching group, we have one sales process, one avatar, and we went from haphazardly kind of making money, but not really being happy, to now, 25 months later, last month our business had a $3.6 million run rate, we had a record month, our margin was over 50%. I'll just repeat that, our margin was over 50%. Cadey and I did incredibly well last month, and it's all because we simplified, so that we could scale naturally.
If you're ready to get some help scaling, let us help you. You do not have to do this all on your own, and you don't have to bounce around from mastermind to coaching group to whatever it is, trying to get the information. We've now helped hundreds of entrepreneurs grow and scale their businesses, and create results they didn't really think were possible. And we know we can help you, because we have a proven system and process that takes business owners from where you are now to where you want to be, and we will help you grow.
Here's what you need to do, if you want to get a hold of me or a member of my team, just go to billionairecode.com, answer some questions from my team, and here's what we'll do. We're going to give you a copy of The Billionaire Code Decoded, our new ebook that explains the entire Billionaire Code, all nine levels you go through as an entrepreneur, go from 0 to $100 million, and we'll give you an opportunity to set up a call with a member of my team, so that you can talk to us about growing and scaling your business.
Simplicity scales, complexity creates constraint. You can do this. Go simplify your business. Cut hard, and you will grow fast. Billionairecode.com, we look forward to hearing from you.